Evolution of Performance Measurement Models in Management Accounting

1594 WordsDec 27, 20107 Pages

Evolution of Performance Measurement Models in Management Accounting
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2nd October 2010
Abstract Changes in management accounting have gone by unnoticed in the recent years. This article tries to explain by how much management accounting has altered through the years, since the 1950s to date, and the reasons that led to the changes. This work also focuses on various performance evaluation models, their applications and their effectiveness.
Introduction There was little advancement in accounting in the 1950s, as much of the effort was made towards finance and stock valuation. However, there have been material changes in the business environment over the past six decades, coupled with…show more content…

Through 1960s, focus shifted to providing information needed for management control of the business processes. In the framework, planning and control systems are composed of management control, strategic planning and technical control. In the 1970s, management accounting laid emphasis on planning and control, where the contingency theory influenced choice of accounting and control procedures depending on the circumstances surrounding the organization at the time (Ittner and Larcker 2001, 379). In the past, the traditional cost accounting model was developed for the mass manufacture of standardized goods. Ittner and Larcker (2001, 379) notes “need to improve the system arose that led new operating concepts such as just-in-time, zero defects and computer-integrated manufacturing could be supported.” The Japanese Management model focuses on just-in-time production, where suppliers make daily deliveries and finished products are immediately transferred to warehouses or shipped to customers. This could be the main reason behind Japan’s manufacturing’s success and competitiveness (Warren 2008, 87). Focus in management accounting then shifted to the reduction of waste in the mid 1980s, leading to the development of activity based costing (ABC) and activity based management (ABM). Warren (2008, 117)notes

for asset measurement within the financial reporting framework. Asset measurement has been in existence and practiced for years immemorial, for Vehmanen(2013, p.132) measurements involve assigning numeral to objects or events in accordance to a set of rules or standards. The gradual sophistication in financial reporting and evolution of global investment markets together with the increasing knowledgeable investors and financial reporting users have gingered interest in asset measurement methods.

Introduction
There are many things one can measure in a business; from production costs; employee absenteeism; budget variances; waste; customer satisfaction; business unit performance, the list could go on and on, however how are these measurements relevant and how do they add to business performance, does simply measuring something mean you can influence it? “If you can’t measure it you can’t manage it” has been stated by more than one influential business or academic expert; Deming, Drucker

review past finding of the BSC. The purpose of this chapter is to provide relevant literature in the field of BSC linked between measuring performance.
2.2 Definitions of the Balance Scorecard
The BSC has been used synonymously depending on the source. Below are a few definitions commonly used:
Investopedia: “a performance metric used in strategic management to identify and improve various internal functions and their resulting external outcomes. The BSC attempts to measure and provide feedback

the predictions and effects of financial accounting reports to discuss the statement based on the previous answer. In the conclusion, the essay will explain how the question helps to understand the importance of learning about accounting in its context.
Main Analysis
Predictions of Financial Reporting
There are four preconditions of financial accounting reporting. Firstly, there are debates that upheld and against the regulation of financial accounting. The supporters of the ‘free-market’ technique

The top most duty of senior finance and management Professionals is to manage organizational resources in a way that accomplish organisational goals. To achieve this goal many procedures, processes, techniques and frameworks have been designed and evolved to assist organizational management in value-based management, customer satisfaction, total quality management (TQM), performance management, and more.
This report focuses on the application on one such framework, the balance score card, designed

served as board chairs, as CEO duality causes conflict of interest as management may override controls (p.4221). Likewise, the research by Giroux (2008) on Enron accounting scandal revealed motivations involves key executive’s greed, weaknesses and lack of ethics on the accounting standard, energy deregulation, auditors independence, law firms and investment bankers lack of independence, neglected board of directors, lack of regulatory control and oversight, as well as political and influential connections

The development of management accounting and management accountants in much of society have been changed. In this paper, we will discuss the hybridisation and change in nature and role of management accounting and management accountants.
The Evolution of Management Accounting
From 1981 onwards, the Management Accounting Practices Committee outlines the definition of management accounting to ‘the process of identification, measurement, accumulation, analysis, preparation, interpretation, and communication

CHAPTER 1
THE CHANGING ROLE OF MANAGERIAL
ACCOUNTING IN A DYNAMIC BUSINESS ENVIRONMENT
Learning Objectives
1. Define managerial accounting and describe its role in the management process.
2. Explain four fundamental management processes that help organizations attain their goals.
3. List and describe five objectives of managerial accounting activity.
4. Explain the major differences between managerial and financial accounting.
5. Explain where managerial accountants are located

Reasons for Management Control Systems Adoption
1
Reasons for Management Control Systems Adoption
Insights from Product Development Systems Choice by Early-Stage Entrepreneurial Companies
Claudia Fernandez
Management Control Systems FE2510, Autumn - Period 1 Professor Eva Wittbom Blekinge Tekniska Högskola September 26th, 2010
Reasons for Management Control Systems Adoption
INTRODUCTION
2
Through the past few years, and due to different theoretical and empirical studies performed

THE INFLUENCE OF FAIR VALUE ACCOUNTING ON REAL ESTATE COMPANIES : BASED ON HONG KONG LISTED COMPANIES
(PROPOSAL)
BY
ZHANG MUDI DEBBIE
12250511
ACCOUNTING CONCENTRATION
GAO JIAYI CINDY
12250295
ACCOUNTING CONCENTRATION
An Honours Degree Project Submitted to the School of Business in Partial Fulfillment of the Graduation Requirement for the Degree of Bachelor of Business Administration (Honours)
Hong Kong Baptist University
Hong Kong
January 2016
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